LONDON (Reuters) - Liberty House, the industrials and commodities group that has been buying troubled steel plants, does not expect China's net steel capacity to fall, despite Beijing's capacity cut targets.

China produces about half the world's steel and pledged last year to cut 100-150 million tonnes of capacity by 2020, which along with infrastructure spending helped prices soar.

The world's second largest economy cut 60 million tonnes of capacity last year and has targeted another 50 million tonnes this year, but Liberty chairman Sanjeev Gupta said China was also adding capacity.

"I understand (the Chinese) have put a cap on (steel) capacity, which means larger plants can increase capacity and have more efficient capacity, and less efficient capacity will be taken out of the system," Gupta told Reuters on Thursday on the sidelines of the CRU World Aluminium Conference in London.

"If anything it makes it worse (for rival steelmakers) because its makes (China) more efficient, more competitive."

Gupta, who was bullish on steel even during the crisis in 2015, said there are still distressed plants that offer value, even though steel company shares globally have risen by 80 percent since early January 2015.

In the U.S., Gupta is betting anti-dumping moves under President Donald Trump will hurt the much larger manufacturing base in the long term.

The Trump administration last month invoked a seldom-used provision of law to launch a probe into whether imports of Chinese and other foreign-made steel are a U.S. national security risk.

It currently has around 150 anti-dumping and anti-subsidy duties in place on steel imports, while the European Union has 39 such measures in place on steel.

"I'm not a supporter of protectionism. I encourage the general move in the U.S. for investment in industry, but protectionism ... long term ... makes (industry) more inefficient and kills downstream (businesses)."

Gupta's 'greensteel' model is based on using renewable energy to fire furnaces that recycle locally sourced scrap and feed the finished steel to his manufacturing businesses that make high value-added goods.

The model puts Liberty's steel plants low down the cost curve, where they are less impacted by policy decisions.

Liberty's move into steelmaking, aluminium smelting and engineering, which started late in 2015, helped operating profit jump 74 percent to $99 million in 2016, while turnover soared 82 percent to $6.8 billion.

PARTIAL LISTING

Gupta, who launched Liberty House 25 years ago while studying at Cambridge University, plans to list some of its multibillion-dollar businesses, probably in 2018.